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Federal pandemic Paycheck Protection Program to reopen Monday with new focus on smaller employers in underserved communities

The federal Paycheck Protection Program reopens Monday for a new round of loans that includes funds set aside for smaller businesses in low- and moderate-income communities and give first priority to community lenders.

The lending program, designed to keep workers on payrolls during the economic crisis precipitated by the coronavirus pandemic now stretching into its 11th month, will resume for new and some existing PPP borrowers.

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Community financial institutions will be given first priority to offer employers the forgivable loans for at least the first part of the week, a new strategy to boost access for minority, underserved, veteran and women-owned businesses, the U.S. Small Business Administration said Friday.

The program, part of the $900 billion coronavirus relief package passed Dec. 21 by Congress and signed by President Donald Trump, is expected to open to all lenders soon after, but no timeline has been given.

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The government said it revised the program to make it more accessible and effective than during the initial round from March to August. Businesses had complained that larger employers got loans while some smaller businesses were shut out.

“The need is really great,” said Bonnie Crockett, director of small business lending for Baltimore Community Lending, a Baltimore-based community development financial institution that is prepared to help small businesses apply for the PPP program through other community lenders. “And the reason we are seeing it again is so many of these small businesses never got through the first time.”

Crockett said she expects to work with very small businesses, some with little to no staff, such as shops or restaurants, that need help putting together an application. The three-decade-old Baltimore Community Lending makes business loans in the city but does not yet have approval as a PPP lender.

“One of the major issues was just figuring out how to put it all together and understand the documents,” she said. “They felt so overwhelmed.”

Maryland businesses received more than $10 billion in loans from the program in its initial rounds, according to data the U.S. Small Business Administration and Treasury Department. Among the borrowers were the Baltimore law firm Miles & Stockbridge, the Baltimore Symphony Orchestra, the Catholic church, numerous private schools, and developers, including David S. Brown Enterprises on Owings Mills and Hogan Companies, an Annapolis-based real estate group founded by Republican Gov. Larry Hogan.

But some small businesses and smaller lending institutions complained of missing out on the program.

The latest round of PPP, authorized through the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, authorizes up to $284 billion that can be used to pay workers and other expenses through March 31. It allows some existing PPP borrowers to apply for a second draw on a PPP loan.

Money has been set aside for specific types of lenders and borrowers, including $5 billion for first- and second-time borrowers through community financial institutions and another $15 billion through insured depository institutions, credit unions and farm credit system institutions with assets of less than $10 billion.

An additional $35 billion is reserved for first-time PPP borrowers. And $15 billion and $25 billion will go to first- and second-time borrowers, respectively, who employ no more than 10 people or to borrowers in low- or moderate-income neighborhoods for loans of less than $250,000. The SBA also said this time around it will work to match borrowers with lenders who work in traditionally underserved communities.

Existing PPP borrowers will generally be eligible for an additional loan if they will use or have used the full amount for an authorized use, have no more than 300 employees and can show business is down at least 25%.

M&T Bank, one of the larger PPP lenders in Maryland, plans to have more than 2,000 employees working to process loans, as it did last year through August, when it approved more than 6,800 loans totaling $1.3 billion in the Baltimore area. Those loans supported more than 135,000 jobs in the region.

“We anticipate similar demand from our customers during the next round because small businesses continue to struggle and continue to need help,” Scott Graham, an M&T spokesman, said Friday.

PNC Bank, too, said it plans to make the new funding available to eligible small business clients.

“We are currently reviewing the updated guidance provided this week by the SBA,” said Marcey Zwiebel, a PNC spokeswoman. “We remain committed to doing all we can to assist our eligible small business customers, who continue to face challenges during this difficult time.”

SBA Administrator Jovita Carranza called the PPP program an “economic lifeline” to millions of small businesses in a statement Friday and said that changes include more targeted relief to small businesses hurt most by COVID-19 and a “simpler forgiveness process.”

The program has doled out 5.2 million loans worth $525 billion to U.S. businesses that employ more than 51 million people. More than 87% of loans have been for $150,000 or less, including 74,000 loans in that range in Maryland, with an average loan size of $101,000. Nearly three-quarters of loans have gone to businesses that employ fewer than 10 people.

“We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers,” U.S. Treasury Secretary Steven T. Mnuchin said in an announcement Friday.

Under new guidelines, borrowers can set the period covered by the loan from eight to 24 weeks. Loans can be used for several new purposes, such as operations, property damage, supplier costs and worker protection expenses.

Housing cooperatives and destination and marketing organizations have been added to qualify as eligible borrowers.

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